Technical Analysis

USD/JPY is up in 13 straight days. This can’t go on

Today’s Japanese CPI report certainly didn’t force the Bank of Japan’s hand. With prices up 3.0% y/y (in line with estimates), there’s no urgency to change tactics. In addition, the BOJ upped its regular bond purchases in a signal that nothing new is coming in next week’s BOJ decision.

At the same time, the US dollar is sizzling. Ten-year Treasury yields are up another 8.8 bps today to 4.31% and up 30 bps in three days. In turn, USD/JPY has added 172 pips to 151.86 in what will be the 13th consecutive day of gains.

This can’t go on indefinitely.

At the same time, this is clearly a fundamentally-driven move. The only way to change it is to change the fundamentals and only the BOJ and Fed can do that.

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